Alaska high court rejects Alyeska appraisal claim

FAIRBANKS (AP) — The Alaska Supreme Court has rejected claims by Alyeska Pipeline Service Co. that the state erred in its appraisal of right-of-way land leased for the trans-Alaska oil pipeline.

The pipeline operator had argued that the Department of Natural Resources misinterpreted a statute governing the lease-price calculation, according to the Fairbanks Daily News-Miner (http://is.gd/kalxCw).

Alyeska argued that the state should have adopted its interpretation of that statute as a regulation under the Administrative Procedure Act and therefore should have provided public notice and allowed public comment. Alyeska also contended that the appraisal improperly included submerged lands the state failed to establish that it owned.

The state Supreme Court issued its decision Friday.

State law requires that the right-of-way lease price be adjusted every five years. The department hired an appraiser and in 2002 informed Alyeska that the annual right-of-way rent would be $236,000.

An appraiser hired by Alyeska said the state lease did not grant Alyeska exclusive use of the land and that the state's appraisers might have, had they been allowed to, value the land at 75 percent of fair market rather than at 100 percent.

The Alyeska appraiser also noted that the state's appraisal included more than 200 acres of submerged lands that were reported "as disputed acreage in navigable waterways."

Alyeska appealed the appraisal to then-Natural Resources Commissioner Mike Menge in January 2003 and the appeal was rejected in 2006.

Alyeska appealed to Superior Court, which upheld the commissioner's final ruling, then to the state Supreme Court.